Palin's Oil Tax Heresy?

September 12, 2008

All of this should
be anathema to economic conservatives, who cry class warfare whenever Democrats
broach the topic of windfall profits taxes. (McCain took
Obama to task when the latter proposed a national windfall tax earlier this
summer.) But it isn't. Two of the most prominent economic conservatives, in
fact, twisted their logic to defend Palin's oil tax when I reached them earlier
this week. "Rather than have the government spend [the tax revenue], they give
it back to the people," Grover Norquist, President of Americans for Tax Reform,
told me. Given the fact that the state is taxing corporations for a quarter of
their profits, the argument goes, it's better to give that revenue back to
individual taxpayers than for the state to keep it. That's a neat formula--once
you get past the fact that Palin initiated the massive tax increase in the
first place.

Stephen Moore, former president of the Club for Growth and
editorial board member of the Wall Street
Journal, expressed reservations about Palin, but nevertheless recounted a
standard defense of her tax increases. "There's an allegation--more than an allegation--that the oil companies
nearly bribed the members of the legislature to get sweetheart deals on these
royalties," he said. "When Palin was elected as part of this anti-corruption
crusade, she basically renegotiated the deal and got a better deal for
taxpayers." But if you take this argument to its logical next step, then tax
increases can be justified as a corrective measure for corporations' campaign
contributious to legislators, which artificially deflate corporate tax rates.
So would fiscal conservatives be comfortable with Congress introducing massive
profits taxes on every oil, pharmaceutical, and insurance corporation in the
country? Don't oil corporations try to buy the same influence in Congress as
well? Moore
just laughs. "Well, I guess you could say they do."

Norquist explains
away Palin's windfall tax by citing geographic differences. "Alaska
is like Louisiana
in that it's not like any other state," he says, later adding that "what they
have is a resource-based economy, which the rest of the world doesn't have."
This tolerance for the high tax status-quo seems strange coming from a person
who famously said he wanted to shrink the federal government "down to a size
where we can drown it in the bathtub."

Perhaps
Norquist's most straightforward defense is the most sincere: "Economic
conservatives like babes, too."